Thursday, September 29, 2011

A seriously bad idea

The Obama Administration's American Jobs Act has a seriously bad idea of the type that one might expect from an Administration headed by a Chicago corporatist who was a humanities academic and "community organiser". The notion is to allow unemployed people to sue employers who fail to hire them for discrimination. This despite the fact that very few US job ads say unemployed need not apply. Econblogger Tyler Cowen has already suggested it may be one of the worst (economic policy) ideas ever.

Let us apply some elementary economic reasoning. The more unemployment there is, the lower the cost of discrimination. So, if you wish to lessen discrimination, aim for full employment. Since the "allow suits for discrimination" proposal will increase risks in, and costs of, hiring, it will discourage hiring, meaning unemployment will be higher than it otherwise would be. So, the net effect is likely to be to increase the overall level of discrimination.

It will also encourage more hiring to be "within networks", as they provide implicit "guarantors" and more sources of information. Marginal workers are less likely to be plugged into such networks.

So, a bad idea even in terms of lessening discrimination and improving the position of marginal workers.

But it sadly fits in with the Obama Administration's track record: we are suffering from serious economic stagnation, so let's stuff up the supply-side of the economy even more! Alas, the evidence is mounting that President Obama seriously does not understand economics.

Don't count on government intervention, it's time to take matters into our own hands. All of the job sites have a "flag" or "report" button on the pages the ads are hosted on. Click those buttons when you see an ad telling the unemployed not to apply, requiring a credit check for a position that does not handle money, or requiring a disproportionate amount of experience for a job (Such as 10 years of experience for an entry level position).

It's time for the job seekers, the unemployed, and the employed who are just sick of what's going on to exercise their rights and...